Messaging Apps Morph into E-Commerce Giants

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Social media engagement among Millennials and mobile ad revenue are at an all-time high. Social networks that can successfully leverage the human engagement inherent in commerce while embracing an all-in-one platform will be able to capitalize on these trends.

“Social commerce” will prove to be a substantial driver of revenue in the near future. Facebook’s Messenger and Tencent’s WeChat are paving the way for social commerce in a race to become the best all-in-one platform.

The Social Commerce Revolution: What You Should Know

The trend of social commerce is taking off. Businesses must utilize social networks to facilitate e-commerce transactions or risk being left behind. The social commerce trend is fueled by innovation. Brands that built an initial marketing presence on social sites via mobile advertisements now have the ability to integrate buy buttons on Twitter and Pinterest, utilize person-to-person (P2P) transfer technology on Facebook, and showcase customized recommendations through automated algorithms.

Across all online channels, social media is the dominant driver of increased retail traffic. According to a report from BI Intelligence, social media e-commerce referrals increased nearly 200 percent between the first quarters of 2014 and 2015. These referrals benefit your favorite retailers; the top 500 retailers earned $3.3 billion from social shopping in 2014, up 26 percent from 2013 (Internet Retailer’s Social Media 500). With more than 75 percent of total purchases influenced by digital (ICSC), social media networks have an
unparalleled opportunity to become e-commerce leaders.

Social platforms are breaking the mold of traditional commerce. They offer consumers an opportunity for personalized group decision-based purchases, provide content portals that encourage interaction between brands and users, allow for authentication of identity and payment, and most importantly promise seamless communication with third parties in one convenient location. The main barrier to social commerce is the interruption of the social experience. Can social platforms overcome the perception that messaging apps are one-dimensional?

The Top Runners: Tencent’s WeChat vs. Facebook’s Messenger

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Tencent launched their Chinese messaging application WeChat in 2011. WeChat is the pioneering model of an all-in-one approach to messaging. The platform encompasses millions of applications (known as “official accounts”) within its system. The breadth of accounts allows users to engage in a completely mobile lifestyle without ever leaving WeChat. Beyond the standard communication feature, users can check in for a flight, get banking statements, buy movie tickets, order food delivery, and even create their own startup. When it launched the capability to hail taxis, users took advantage booking 21 million rides within a month. The app takes functionality and integration to a whole new level.

In June 2013, Tencent introduced WeChat’s payment portal, the key to accessing user payment credentials and unlocking monetization possibilities without requiring users to open a mobile browser to complete payment. WeChat has opened its platform to sm
all and medium sized businesses (SMBs), allowing these franchises access to its 549 million monthly active users (MAUs) and over one billion registered users. There is a minimal fee to sell goods and services on WeChat and profit from its customizable application programming interfaces (APIs).

WeChat makes the interaction between brand and user effortless and indefinite. Although it is leading the charge for messaging technology in Asia, its international versions are being challenged by new-sophisticated platforms developing across the globe, specifically Facebook’s Messenger.

Messenger

CEO Mark Zuckerberg introduced Facebook Messenger in 2011, enabling users to send messages one-on-one and in friend groups to other Facebook contacts. In the past two years, the basic communication application has evolved exponentially to include voice calling, photo sending, and location sharing. Most notably, this past March, Messenger split from the Facebook app altogether, becoming a stand-alone web version.

The new Messenger includes a peer-to-peer (P2P) mobile payment feature and allows third party developers to build services on top of messenger. At Facebook’s F8 developer’s conference, over 40 new apps for messenger were announced as well as a new participant to the conversation: businesses.

Businesses on Messenger, a component of the new Messenger platform, which creates an additional avenue for businesses and customers to communicate, will be one to watch in the coming months. After launching Facebook Commerce (F-Commerce) a previous e-commerce campaign that fell flat, Zuckerberg and executive David Marcus are taking a new approach to tackle social commerce.

Businesses on Messenger will act as a channel to facilitate the exchange of information and payments. The ultimate goal is to simplify the interactions involved in an e-commerce purchase. Typically, a buyer is overwhelmed with email receipts and confirmations. Additionally, customers have no choice but to log into multiple websites to track shipping and solicit feedback. Businesses on Messenger streamlines this process by allowing buyers to choose to “start a conversation” with a business on the checkout page of an e-commerce website. Retailers see a customer service portal powered by Zendesk, allowing them to respond quickly to customer inquiries and avoid frequent email communication. Facebook’s launch partners for Businesses on Messenger include Everlane and Zulily.

Facebook has 600 million MAUs on Messenger, and recently acquired WhatsApp, a messaging app targeting South America, Europe and Asia, which boasts 800 million MAUs. The two apps combined account for 20 percent of the world’s population, leaving much room to grow and continue to compete for dominance in social commerce.

Social networks like Facebook’s Messenger and Tencent’s WeChat are leading the tech industry by adapting to social commerce. As they continue to challenge each other to add new facets to their all-in-one platforms, Millennials won’t be able to resist buying into the e-commerce trend.

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I am a junior volleyball player studying marketing, public relations, and digital imaging at the University of Akron, OH. I want to travel the world and write about it, but Minnesota will always be my home.

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